The executive branch has made a good faith effort to implement California Competes, but the problems described above are largely unavoidable. We recommend that the Legislature end California Competes. In general, broad‑based tax relief—for all businesses—is preferable to targeted tax incentives.
While a lot of attention is paid to state sales tax rates, many localities impose their own tax, leading to relatively high tax rates in several major U.S. cities.
Last year, Chicago, Illinois, vaulted to the top of the list of cities imposing the highest combined state and local sales tax when a county tax increase brought the total rate to 10.25 percent, a dubious distinction it now shares with Long Beach, California, which reached 10.25 percent on July 1, 2017.
California lawmakers have proposed more taxes and fees in the first half of the 2017-18 legislative session than in all of 2015 or 2016. If each proposal became law, the tax burden in California would increase by more than $373 billion per year. To put this in context, all revenue in the 2017-18 State Budget is expected to bring in $178.4 billion.
One of the few great inescapable facts in the field of economics is the reality of the business cycle. No matter how high-flying an economy might appear, another recession is coming sooner or later. It can be difficult, if not impossible, to regularly predict when one might occur, or how severe it may be, but recessions and their place in the business cycle are an accepted fact of economic life. Therefore, preparing for recessions is an equally inescapable concept.
It has been more than eight years since the end of the last recession, the third longest period of expansion in U.S. history, and many are rightfully beginning to look ahead to the next economic downturn. However, one of the most effective ways to look forward is to look back and make sure that we have adequately learned the lessons of the Great Recession. Nowhere is this type of postmortem more appropriate than for state and local governments.
If the next recession hit the U.S. this year, more than a quarter of states would be financially unprepared to weather even a moderate downturn, according to a new report.
Fifteen states would struggle in the case of a recession-related tax revenue slump and spike in demand for services, such as Medicaid. They are more than 5 percentage points below the share of funds left in their budgets they would need to tap, according to a new Moody’s Analytics analysis. Another 19 states narrowly fall short.